Putin turns deaf ear to warnings on economy amid Ukraine crisis

MOSCOW (AFP) – Senior Russian officials are sounding dire warnings as prices rise, the ruble plunges and growth grinds to a halt, but President Vladimir Putin is ignoring their advice amid the standoff with the West over Ukraine.

Speeches at an investment forum in Moscow this past week by Putin and key members of the government exposed glaring differences.

While the Kremlin strongman sought to reassure investors and stressed the situation was under control, senior officials gave an alarming picture of an economy battered by Western sanctions and struggling to eliminate structural weaknesses.

Economy Minister Alexei Ulyukayev warned of an “explosive situation” created by a combination of inflation that is set to reach around 8 per cent this year and economic growth expected to be less than 1 per cent.

The chief executive of Russia’s largest bank, Sberbank, Herman Gref, himself a former economy minister, compared the current state of the economy to that of the Soviet Union when it broke up amid falling oil prices and “huge structural problems”.

“We cannot allow the same situation,” Gref said, urging the authorities not to repeat the those mistakes if it did not want to suffer the same fate.

Oil prices have recently fallen under $100 per barrel, the level at which Russia needs to shore up its public finances. Such public critical comments suggest that the speakers are not getting their opinions across to Putin, experts said.

“Gref and Ulyukayev’s speeches reflect a situation where they are losing influence,” said Andrei Yakovlev, the director of the Institute for Industrial and Market Studies at Moscow’s Higher School of Economics.